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The municipal-bond market suffered dutifully through its customary March and April seasonal weakness, typically blamed on the combination of investors selling munis to raise cash ahead of April's tax deadline and a comparative dearth of maturing bonds that generate proceeds in need of reinvestment. It's a quirky pattern, but it holds up pretty reliably from year to year, and munis see some of their worst returns during these months.

But hey, April showers bring May flowers, right? Not this year. Instead, the early-spring slump has been compounded by May's sharp bond-market selloff. June might not provide much respite, either, with analysts expecting an unusually heavy supply of new muni bonds in the month ahead, which could further pressure prices.

These troubles come even though states and cities continue a gradual mending of their finances and muni defaults remain extremely rare. That all matters little in times of broad-based bond malaise. Munis take their cues from Treasuries, and the 10-year Treasury-note yield rose further last week, to 2.130% on Friday from 2.012% a week earlier, per Tradeweb data, up half a percentage point since the beginning of May.

Those rising Treasury rates pushed up average yields on top-rated 10-year tax-free bonds to 2.09% Friday, according to Thomson Reuters Municipal Market Data, the highest level in over a year and up from 1.69% just a month ago. One market barometer, the
iShares S&P National AMT-Free Muni Bond MUB -0.12956964368347987%iShares National Muni Bond ETFU.S.: NYSE Arca107.91
-0.14-0.12956964368347987%
/Date(1481335200006-0600)/
Volume (Delayed 15m)
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1437026AFTER HOURS107.88
-0.03-0.027800945232137893%
Volume (Delayed 15m)
:
902
P/E Ratio
N/AMarket Cap
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Dividend Yield
2.3255601890464277% Rev. per Employee
N/AMore quote details and news »MUBinYour ValueYour ChangeShort position
(ticker: MUB) exchange-traded fund, lost 3.1% in May and closed at $108.19 Friday, crashing through its previous 2013 low point of $109.63 recorded in March.

Investors, who had been slow to return to munis even before the late-May bond rout, pulled $157 million from muni mutual funds and ETFs last week, per Lipper data. Over the previous three weeks, those funds had eked out a relatively feeble $392 million net inflow, a fraction of the $2.45 billion net outflow recorded over the prior nine weeks.

The market now stands at a key juncture, with many a muni bond sporting a June 1 maturity or coupon-payment date, leaving investors with cash to reinvest right when they're acutely wary of munis and bonds in general.

"All eyes will be on next week's fund-flow report, as the market tries to determine just how much of the proceeds from the big June 1 coupon and principal redemption will be reinvested back into the market," wrote Chris Mauro, head of U.S. municipals strategy at RBC, on Friday. Last year, the final week of May and the first week of June produced just over $1 billion in combined inflows, and Mauro says "it appears doubtful" that next week's muni-fund flows can approach last year's figures.

The bad news is that it now takes an adventurous investor to wade into munis at a time of such broad uncertainty regarding rates in general and the ongoing muni-market troubles in particular. Investors don't typically seek out munis for adventure or risk.

"Given the magnitude of the recent adjustments and our expectation for only mildly higher benchmark yields by year end, investors may want to consider gradually entering the market as new-issue supply arrives," Morgan Stanley Wealth Management strategists wrote on Friday.

Ever the stalwart, the muni market will persevere again, but its current struggles are proving more intractable than most.